By Dave Glenn and staff, ACC Sports Journal
October 14, 2002 RALEIGH When N.C. State ceded most of its control over the Entertainment and Sports Arena to the parent company of the Carolina Hurricanes, chancellor Marye Anne Fox complained that her university was getting the shaft on the deal, that the university had access only for its home basketball schedule and a couple of dates per year for graduation. But now, after nearly three years of waiting, the arena officially has a corporate sponsor (RBC Centura), and it's pretty clear the chancellor was very wrong. N.C. State got a sweetheart deal with the formerly named ESA, even if the school does have to pay some $600,000 to lease the building every year for basketball games.
The naming-rights deals an $80 million investment by RBC Centura over the next 20 years will net the school about $16 million over the life of the contract and provide some $22 million in a separate fund for upkeep of the building for the next two decades. Hopefully, that means it won't be obsolete for anything other than one sport in 10 years, like, say, the Smith Center in Chapel Hill.
N.C. State got the good deal on the ESA because the Hurricanes agreed to take on the liability of paying all operational expenses. That means the NHL franchise will reap whatever profit comes from having some 250 events per year in the building. This year, that likely will be a lot of income.
Yet N.C. State let the naming-rights battle drag out over a separate issue: parking revenue for employees of the arena. After fierce, sometimes nasty negotiations, the school and Gale Force Holdings came up with an agreement that netted the school about $600,000 for parking and concession revenue for the previous years of the arena's operation.
That money will go straight into the athletic department's cash reserves, a nice little savings account for Lee Fowler and his department, which is going through a massive building project at Carter-Finley Stadium, Doak Field and several other sports facilities on campus. The bulk of the $16 million the school will receive over the life of the naming-rights contract will go toward those projects, which also will include revamping both the Weisiger-Brown Building and the Case Athletics Center.
That's a huge difference in benefit between the RBC Center and the Smith Center, which has turned into a single-use facility that has had great difficulty attracting many decent non-basketball events.
UNC still is getting more than $750,000 a year from the state legislature to help pay for the Smith Center's operating expenses, and the building has been in the red for 13 consecutive years. That money otherwise would have to come out of the athletic department budget. But that was the unwritten deal that was struck in the mid-1980s, when the school agreed to raise all private funds to pay for the arena's construction.
So who got the better deal? N.C. State had a larger public investment, a total of about $92 million (of the original $158 million cost) from Raleigh/Wake County and the state of North Carolina. The university's contribution ended up around $28 million, paid out from the Wolfpack Club. The school claims it provided a total of $58 million, giving itself credit for helping secure the $22 million investment from the state that's still taxpayer money, by any definition plus $8 million for the value of land it donated for the project.
Whatever the numbers, Fox now finally admits what we knew all along: The school got a fantastic deal, one that was improved by changing the name on the front doors. And that's not to mention getting one of the better home basketball facilities in the country.
Over the next 10 years, the school will get back the $10 million it gave up for its original naming-rights deal, from eastern North Carolina farmer Wendell Murphy. It also will get an adjustment of about $3.5 million that converts that gift, which was pledged nearly a decade ago, into current currency.
On the day the deal was announced, Fox admitted that the relationship over the years between the school, Gale Force and the Centennial Authority, which oversees the arena, has been contentious. But it is getting better.
Over the years, that relationship has built, Fox said, and we are very pleased with the prospects for successfully going forward.